The Wat system (described by Izumi, in a 2001 paper)is a peer-to-peer complementary currency system initially designed by Eiichi Moreno. It is used in Japan typically to allow for small businesses to issue IOUs (called WAT-ticket) to their suppliers. These suppliers in turn circulate them within an undefined community, until they are eventually redeemed with the issuing business. It was described in detail in a previous ijccr paper (Lietaer 2004). Conceptually, the use of someone’s IOU used by others as a medium of payment is not an entirely new concept: during a banking strike in Ireland, Guinness issued cheques which circulated as currency until redeemed in pubs. The main originality of the WAT system is that it is designed as a pure peer-to-peer system without any significant role for a centralized function.

The challenge for the Wat system, and similar peer-to-peer systems, is that the trust in the currency is based in the trust of the community that the business or person backing a particular WAT-ticket is able to redeem the ticket on presentation. This is why the WAT system is most successful in Japan among small, well-established businesses. Indeed, for businesses that are not well-known or for individual people wishing to issue a WATticket, there may be a credibility issue since the second or subsequent receiver of a circulating ticket may not know the credit-worthiness of the issuer. This has been recognized and one solution is an independent guarantor such as an NGO. For example this is proposed in a paper on implementation of WAT and iWAT (its online version) for rebuilding villages damaged by the 2004 Tsunami. (i-WAT 2005).